What Could Silently Break Your Business?

The general rule: no single customer should exceed 15-20% of revenue, and your top 5 customers shouldn't exceed 50%. Beyond these thresholds, you're exposed to significant revenue risk. If you're above these levels, prioritize diversifying your customer base before the risk materializes.

Three strategies. First, document their knowledge, including processes, relationships, and institutional memory. Second, cross-train others to handle critical tasks. Third, build redundancy in relationships by introducing other team members to key customers and vendors. This takes time, but it dramatically reduces fragility.

A basic plan covers: (1) What happens if you (the owner) can't work for 30+ days? (2) What happens if a key employee leaves suddenly? (3) What if your main location becomes unusable? (4) What if a critical system or vendor fails? For each scenario, identify who does what and what resources they need.

Use a simple 2x2 matrix: likelihood vs. impact. Address high-likelihood, high-impact risks first. Then high-impact even if lower likelihood. Many businesses ignore risks that seem unlikely until they happen, at which point it's too late. Focus on risks that would threaten business survival.

No. Start with critical processes that happen regularly, involve multiple steps, require consistency, or would cause problems if done wrong. You don't need a 50-page manual. A simple checklist or one-pager is often enough. The goal is that someone else could do it in an emergency.

Most businesses carry general liability and property insurance, but gaps often exist in key areas. Consider whether you have coverage for business interruption, key person loss, professional liability (errors and omissions), and cyber incidents. Review your policies annually and after any major business change. Being underinsured leaves you exposed, but being over-insured means paying for coverage you don't need. A broker who understands your industry can help identify the right balance.